Gold is (dead) Money


Let's update Monday's charts, shall we?




That's a serious breach. folks. And looks like it's going parabolic:


Maybe this line will hold?
I strongly doubt it. Look at the analogous weekly chart of closing prices. Gold couldn't even finish a week back up at the trend line.

The mining stocks also made new lows. One would expect them to diverge when a bottom is in.

Please check out GDXJ,


and, even more tellingly, the S&P vs. GDXJ since Nov 19, 2012.
 It seems to me that gold and silver will not recover until lots of the PM blogs go the way of Mr. Silvergoldsilver. It may be several years before we see the $1525 line in the sand that was breached April 12. That's not a prediction, mind you, but a possibility that one should deny offhand at one's own financial risk.

I say that sadly, as I strongly believe in the merits sound money, detest the idea of central planning, and resent the corruption and incompetence of the half-men and sociopaths running the show. But the charts probably aren't lying.

28 comments:

Warren James said...

Ouch. I echo the sentiment in your last paragraph. I'm betting this means TPTB are losing the battle against the deflationary pressures @ work. Interesting to see strong USD. All my spidey senses more nominal money printing somewhere shortly, probably by a man with a beard.

duggo said...

"But the charts probably aren't lying."

Dear GM, The charts never lie. They always tell you what has happened and where we are now. What they don't do is tell you what will happen next. (my usual mantra).
Also, charts reflect what is happening to "paper" gold and Silver as the big cockroaches get out of it. Unfortunately because the "paper" market is the overwhelming factor in the PMs it takes the price of the "real" stuff down with it.
Good for all those sensible people in the East that are buying.
So for the rest of us it's "sit tight and be right" .

I just get the feeling that if people like Soros are flogging their "paper" Gold then the collapse of the "paper" market may be at hand.

But as I always say "what do I know".

SugarLover said...

I subscribe to a macro/TA newsletter, and the gut that writes that only uses linear charts, as they are 'more honest' according to him.

If you look at a long-term linear gold chart the trendline support (an oxymoron if ever there was one) is way lower than on the log chart.

He's an honest TA guy, in that he admits that TA is just a signpost, not a guarantee. However, that does mean it's virtually useless. All trendlines break eventually.

So, how low can it go? And will it bounce, a repeat of the 80s bull market correction, or will it be the paper markets that break. I suspect we will know either way pretty soon.

Duggo, re Soros, he is no lover of America. One has to assume he knows as much about the potential for paper gold to break as anyone, and the resulting impact that would have on the US, so perhaps you are right. However, he could just be a very canny trader eh, and will buy the ETFs at the bottom. So, no help there!

Jim said...

This is the Gold chart that I follow...

http://www.chinadaily.com.cn/business/2013bargingold/Buyers-rush-to-purchase-bargain-gold-in-China.htm

Spicy Guacamole said...

Wow, silvergoldsilver is gone? That is truly the end of an era. Indeed its existence was one of the great contrarian indicators of the market top. Now if only Harvey and that feces guy closed shop - then it would be time to load up the truck and buy!

Archer said...

Yes, as the removal of physical gold from the system continues unabated, though varying in magnitude from from day to day and week to week, the fractional gold system, more colloquially known as the paper gold market, deflates/collapses.

Slow Loris Larry said...

A couple of points of clarification:

@ Duggo

According to a number of reports, including the most recent I have seen today on jsmineset.com just below the doggie pickies, Soros sold $2.5 million of GLD shares but then bought $25 million worth of call options on GDXJ. Just can't believe them MSM headlines!

@Archer

As Bron has pointed out again recently, the paper gold and physical gold markets are joined at the hip through the conventional right of those holding unallocated gold contracts to request allocation in three market days. Until that link is broken, by a default by an LBM OtC Bullion Bank, there will be no disconnect at all between 'paper' and 'physical' gold, as their prices are the same. There are rumours that at certain times in past decades certain BBs have been on the verge of default, but were saved by Central Banks including the Bank of England and the Bundesbank (and maybe even the FED), but nobody who may know for sure is talking.

Funky Tape said...

GM - Might have to disagree with you about the serious breach on the SPX:GOLD chart. I think if you posted your gold vs the inverted VIX chart again on a weekly basis with an envelope or standard BB's, you'd get a different angle on the current situation.

The weekly BB's on the VIX are at a ridiculously tight range which would indicate that someone either has to get scared and sell or go "full retard" greed - and do it rather soon. Of course, if the former plays out, along with gold getting killed on the downside, that would definitely vilify said breech.

Another "tell" that the market makers are a bit nervous at these levels is indicated both by a VIX vol discrepancy (VXO:VIX) and by a divergence between prices. As equities pulled away in late 2006 and ran hard into 2007 the VIX continued down and eventually found 9 IIRC. Today, we're doing the same - despite going parabolic on the weekly into all time highs - while the VIX won't dip below 12. Really? Seems someone is not totally onboard with unhinging those longs.

As always, thanks for keeping it up to date, man.

PS. Y'all know those Zionist pigs eventually got to SGS. *wink*. Bets on when they get ZeroEdge next?

duggo said...

@Slow Loris

Got this from Tekoa da Silva

4. Lastly, the fund reduced its stake in the GLD gold fund from 600k shares to 530k shares, for a total reported value of $82,000,000. I know it's only chicken-feed for Soros, you and me but it's a sign.

Looks like he's buying "real" Gold. He's hasn't texted me lately so what do I know.

I never bother with mainstream media.

Archer said...

SLL wrote,

The paper gold and physical gold markets are joined at the hip.

They are not joined at the hip, but, rather, a host of conventions and practices have been in place for such a period of time that it appears as if they are one and the same. But the two entities are not they same, clearly, or we would not bother to employ the distinction paper market and physical market. As such, there are conditions-as when some unspecified/critical quantity of unallocated gold becomes (or is requested to become) allocated- that the inherent difference between the two markets will manifest in the most profound of ways.

In the meantime, the prices of the two respective markets will be in lockstep right right up to the point that they couldn't be more different than the price of a rusty nail and the price of a pair of box seats to a World Series game seven.

There are rumours that at certain times in past decades certain BBs have been on the verge of default but were saved by Central Banks including the Bank of England and the Bundesbank (and maybe even the FED), but nobody who may know for sure is talking.

Au Contraire.

We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it.

Sir Eddie George, Bank of England, September 1999

SugarLover said...

SLL,


You wrote:

'the paper gold and physical gold markets are joined at the hip through the conventional right of those holding unallocated gold contracts to request allocation in three market days.'

Then Archer, you wrote:

'They are not joined at the hip, but, rather, a host of conventions and practices have been in place for such a period of time that it appears as if they are one and the same.'

Archer, SLL didn't say they are the same, he said they were joined at the hip, and indeed they are. Appears you are arguing with yourself.

SLL, you wrote:

'There are rumours that at certain times in past decades certain BBs have been on the verge of default, but were saved by Central Banks including the Bank of England and the Bundesbank (and maybe even the FED), but nobody who may know for sure is talking.'

Archer the wrote:

'Au Contraire.

We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it.

Sir Eddie George, Bank of England, September 1999'

Where is the 'contraire' then Archer? Your quote is just from hearsay, unconfirmed by Sir Eddie, but even so, you are agreeing with SLL that central banks saved the day.

Don't believe everything you read on t'internet Archer. Some have been predicting freegold ever since 1998, year in year out.

Wrong!

Archer said...

The late Sir Eddie didn't need to confirm that the comments were his, his silence in response to the many accounts that claimed he did utter those words amounts to assent. What's more, he never, to my knowledge, challenged those claims in court. If the quote attributed to him were a noxious lie he would have.

In the meantime, while conceding that SLL did not use the same language that I did in reference to the relationship, such as it is, between the physical gold market and the paper gold market, you are, in my view, making a superficial point rooted in semantics.

Tony said...

@ Archer,

Gary....err....Sugarlover (tough keeping track of all those monikers) is just throwing out his moderator resume for STFU. And dually noted, anytime a freegold reference is made, he assumes the duty of playing contrarian.

We get it SL....you don't buy into anything resembling FG. I was hoping for a break from your FOFOA comment section rants, man. Let's carry on.

SugarLover said...

Ah Tony, how little you know of me, you seem to buy all of the hype! Well done on that.

I fully expect paper gold to fail at some point, and physical to be priced much higher, and then used to settle international imbalances.

All the bells and whistles of freegold I don't buy. The public will never save in gold, the world is not about to change for the better. It's just a cycles thing, and gold is (as usual) going to fare very well through the reset.

What's wrong with reposting some old Fofoa quotes then, on his own blog? Weird, maybe he is ashamed of them? I note his latest post mentions that 'he doesn't do predictions' again, then in the comments section one of his less bright followers copies in a prediction comment from an old post..wonder if that'll be deleted?

Now, Tony, be a good boy, this isn't Fofoa's, so if you want a break from me, you know what you can do don't you?
__________

@Archer, my post was pointing out that yours was all around semantics, so I'll bow to your greater knowledge in that area!

Best wishes.

Tony said...

Yawn

Warren James said...

Please let's not get into an argument about the relative merits of Freegold. I think most of us here have read most of it on both sides (comprehensively). Unless there is NEW information or new framework comparisons available then there's little point. Thanks all.

POG continues to fall in Monday morning Australia trading ...

S Roche said...

@Duggo @SLL,

Re Soros & GLD sale...

70,000 shares at $82,000,000 is the price of gold, not GLD. Rookie error by TdS...closer to one tenth. George tells me he was just re-balancing to get a bit more leverage into his life. I read somewhere* he now has $202m or so in gold related investments which makes it his 2nd largest exposure.

For those interested that little rat Procheimian only ever wants to interview me when I lose money, so I expected his call late last week when I was anticipating -ve GOFO and positioned accordingly. Flat Friday and today fortunately as silver has bit the shed.

*somewhere reliable.

duggo said...

FOFOA has written two posts close together which is unusual so he must be anticipating the big reset soon.

I actually go along with his thoughts on Freegold. Sounds logical to me but as we all eventually discover when it comes to real life logic seems to be lacking.

FOFOA in is two latest pieces has finally answered questions that I asked when I was allowed on his site. I think I was too critical or not worshipful enough to become a true commenter so I think I was excommunicated. Anyway no hard feelings.

I must say most of his tweeters or twitters that are cheering the fact that the price of Gold is going down rather reminds me of a person alone in a dark forest whistling to keep their courage up. Nobody that holds all of their savings in Gold likes to see the price of Gold decline even if the price is nominated in "paper" Gold.
The thing that they are holding onto (me as well) is the hope that the decline is the "signal" that the reset is near at hand.
I admit that I'm a worried sailor on the good ship Freegold and I've tied myself to the steering wheel in order not to get washed overboard by the panic-selling storm.
I'm "all in" until I come through the storm or go down with the ship.

S Roche said...

OT but Another Snippet on Volume

between London v Comex http://www.cmegroup.com/education/files/dodd-frank-extraterritoriality-trust-but-verify.pdf

"The majority of U.S. players, to no one’s surprise, are banks. According to the OCC, while over 1,350 insured U.S. commercial banks and savings associations reported derivatives activities at the end of the fourth quarter 2012, derivatives activity in the U.S. banking system continues to be overwhelmingly dominated by a small group of large financial institutions. Specifically, JPMorgan, Citibank, Goldman Sachs, and Bank of America represent 93% of the total banking industry derivatives notional amounts and 81% of industry net current credit exposure."

"In the U.S., 80% of financial derivatives are interest rate derivatives, 12% are foreign exchange derivatives, about 6% are credit derivatives, with the remainder being equity and commodity derivatives."

"What many may not know, however, is that the top U.S. banks’ derivatives portfolios are about 96% OTC, which until 2010 were unregulated, and only 3-4% are exchange traded."

If extrapolated to gold and silver, London v Comex volume, this is in line with the best estimates I have read of 20:1+ for gold but well in excess of 10:1 estimates for silver volume. Bold emphasis added by me. In addition in this article, there is a chart of trading volume over end-user volume which confirms that 100:1, or thereabouts, is consistent across all derivative asset classes. Note that "commodities" shares 2% of total derivative volumes with equities.

S Roche said...

On Topic,

Mohamed El-Erian on What Gold Is Really Telling Us:

http://www.ft.com/intl/cms/s/0/07def1c8-bf07-11e2-87ff-00144feab7de.html#axzz2TpsicNnF

Cites the Cyprus gold-template as a trigger...from my recent reading about structured products playing a part in gold's dramatic fall, I am considering that they may have played a part in the 2011 spike.

Quite an irony if it was the case. What was seen at the time as righteous buying confirming all that is bad with the over-leveraged complex financial system, the price advanced in leaps and bounds as one of the worst aspects of that system kicked in...the standard line about the debt ceiling debate just does not gel.

I will pursue this and let you know what I find out.

milamber said...

S Roche,

Doesn't the LBMA clear the amount of gold that Cyprus was "rumored" to be selling, like every trading hour?

http://www.thecityuk.com/assets/Uploads/Bullion-Markets-2009.pdf

Do you really think the Cyprus Rumor caused the plunge because so much "gold" was going to be hitting the market?

Seems kindof shaky to me.

Milamber

GM Jenkins said...

Thanks for the comments, guys. Always educational.

Good points, Funky Tape on VIX. Clive maund here also presents a bullish angle.

I'm "all in" until I come through the storm or go down with the ship.

Gold's ascent in the end is dependent on "strong hands" like you, duggo. There's a lot of talk about manipulation of the paper price, which obviously exists to some extent (but the pervasiveness thereof, as well as the main actors and their means, remain elusive, so out of principle i lean towards skepticism and conservatism vs. flailing paranoid accusations). But leverage works both ways, and if it weren't for momentum chasing in the 2009-2011 run-up, for example, and people could only buy gold with cash, who knows if it wouldve gone above $1300? When GATA first came together, they were saying gold should be at $1000, and that bar keeps going up. I suppose it should to some extent, since currencies are being debased, but the speed at which it "should" be going up is not really quantifiable. So the floor is being set by strong hands who lock up the metal and have no intention of selling it, even if they have to pass it down to the next generation.

SugarLover said...

Re: 'the floor being set' GMJ, the other issue that guarantees the flooe is simply cost of production. At these levels, physical gold is a virtually riskless asset. Listen to this interview with the CEO of Goldcorp:

http://www.bloomberg.com/video/goldcorp-s-jeannes-sees-gold-slump-as-short-term-iDAf9ByZRfC0ZFXaPQOXLQ.html

They're a low cost producer, but he cites average cost per ounce at around $1300. If the price goes down to or below that level many mines will mothball operations, or go bust, and there's an immediate supply problem, with likely further huge demand from the East if the price dips.

The freegolders are getting very excited at this minor correction. They imagine the US is just going to sit by and allow the paper price to collapse. No way Jose. There is a floor here, at I think we have just seen it at $1320. This thing is going to go on for another 3-5 years at least.

All those writing off miners as a bad investment now,let's see what happens over the next 3 years to the HUI. I reckon gold to $3,500+, and the HUI up by 400%+ from here. That'll be the time to get out of miners.

@WJ, re the Freegold issue, I agree, no point rehashing all of that, but isn't it just interesting that Tony feels the need to come here to attack free speech and defend Fofoa? And assume others disagree with all of freegold, when in fact many like the idea of physical gold, just don't buy the cult. I think it's the online equivalent of the Moonies, and with a bit of luck Tony will do as advised and steer clear of trying to discourage free speech blogs like this one.

For a more amusing view on gold (from writers/fund managers that were screaming 'buy' in Oct 2011), have a read at this load of nonsense:

http://www.bloomberg.com/news/2013-05-19/gold-bear-bets-reach-record-as-soros-cuts-holdings-commodities.html

Gold totally unloved now, equities adored, seems like a nice set up for what comes next I'd say.

@Duggo, don't fret, just hold on, we'll be fine. But what do I know ;)

S Roche said...

@Milamber,

The Cyprus "Template" is/was the cause for concern, not the amount of Cyprus's gold, which as you say is negligible. Italy's gold, Portugal's and Spain's - let alone France's gold, were seen to be "on the block".

VtC believes they will talk about selling if forced to, and Cyprus was forced to, but never actually sell due to the Central Banks being independent of political wiles. So far, with Cyprus, that is holding true.

costata said...

i lean towards skepticism and conservatism vs. flailing paranoid accusations

Flail GMJ, that''s how we roll in the blogosphere!!

victorthecleaner said...

What do I believe?
The official European gold is an exchange reserve rather than a government slush fund. The governments will all partially default, I am afraid, but not sell a single ounce. That has been clear from the outset, given the architecture of the Eurosystem.
I did say that I expect the Eurosystem to eventually balance their TARGET2 accounts using (revalued) gold, but that is about balance of payments rather than government debt.

Victor

Tony said...

@ Sugarlover,

Discouraging free speech? Not hardly. Discouraging your tired commentary on Freegold? Ahhh...that's more like it. You've made your point a number of times-- no need to get all testy, amigo.

SugarLover said...

@Tony,

'Discouraging free speech? Not hardly. Discouraging your tired commentary on Freegold?'

The two aren't mutually exclusive old chum, but press on, defender-of-the-faith.